Shell Anticipates End of Rationing

By J. P. SmithDecember 24, 1978

The nation's largest gasoline marketer, Shell Oil Co., said yesterday that its supply outlook has improved, and that it may be able to end rationing by February.

Because of high demand for Shell gasoline-up as much as 14 per cent over last year-Shell, with Energy Department approval, has been rationing, or "allocating," gasoline to its dealers, wholesalers, and to other refineries.

The run on Shell gasoline, compared to a 2 to 3 per cent increase in gasoline demand elsewhere in the industry, is the result of DOE oil pricing regulations that have forced Shell to undersell its competitors by as much as 3 cents a gallon.

Shell executive Ronald E. Hall said in a phone interview yesterday, "Our supply situation is improving, and we are hopeful we will be able in February to remove allocations, but that is till a function of a lot of variables." Hall is the general manager of Shell Oil Products in Houston.

The oil industry and deputy Energy Secretary John F. O'Leary have warened there could be spot shortages of unleaded gasoline over the next year unless federal price controls on gasoline are lifted.

Shell's announcement about possibly ending allocatins of gasoline in February does not rule out the possibility of such spot shortages.

Shell and Texaco Oil Co. have been experiencing tightened supplies of unleaded gasoline.

Hall said Shell expects to sell about 685 million gallons of gasoline during January, just 4 per cent more than last year, This, plus the expected reduction in driving that takes place in January will allow the oil to giant supply its customers without cutting back in allocations, he said.

Earlier this month Shell, in a proceeding before DOE's Office of Hearings and Appeals, won approval of its plan to reduce deliveries to its customers as little as 75 percent of what they would have been entitled to under Energy Department regulation. In actual practice, however, Hsell will end up supplying more gasoline this December than it did in December 1977.

Other major oil companies, including Texaco, Atlantic Richfield, and Continental Oil Co. have had to rein in deliveries-or have indicated an intention to reduce them. The reasons vary from company to company.

President Carter, in April 1977, said that he planned to end gasoline price controls. Because of fears that winning congressional approval of lifting gasoline price ceilings would stall passage of the energy bill, Secretary James R. Schlesinger ruled out sending the measure to Congress.

Until recently the White House was expected to send the gasoline decontrol package to Congress early next year. Because of the 14.5 per cent oil price increase announced by the Orgainization of Petroleum Exporting Countries last week and increased concern about inflation, some senior administration officials are now saying in private that the President has yet to make a final decision on decontrolling gasoline prices.